A Day at Works

Customer loyalty across industry is declining, driving a new paradigm of managing customer. Instead of pushing loyalty to certain product, you needs to realize that customer’s need is growing thus migration must be managed to the way profitable for the firm. In managing customer migration, you need to understand the indication of migration, and redevelop value.

But before you manage migration, you must sure whether customer migrate or defect. Defection is occurred when customer value (what value customer seek for) is remain the same but competitor offering is better. Migration is occurred when customer value is changes because:
1) customer need is changing due to changes in lifecycle and/ or social status, for instance mini sedan buyer migrate to buy medium sedan
2) customer seek variety due to active competitor, for instance apparel buyer who buy from new designer who do promotion. Based on above reason then we understand indications whether customer will migrate or not.

Value redevelopment can be conducted by many ways, from the most essential to the most superficial: 1) product re-design, 2) enhance delivery channel and 3) developing marketing program –after understanding why customer see existing offering is not relevant anymore, and whether customer will come back.
Product redesign commonly happened when the product status is decreasing, for instance Volvo is considered as vehicle chosen for executives, but as Volvo maintaining its value proposition, corporate executive nowadays changes to be younger, and casual thus making BMW more relevant. To gain back his position, then Volvo design is changing to be more casual and feminism.
Delivery channel enhancement can be conducted by enhancing frontline’s service skills, adding augmented value in delivery such as tracking system. Developing marketing program includes developing loyalty rewards, and ways to enable cross loyalty.

Customer insight is a must for creating value and developing relationship. Without an understanding of what customer want, firm will face difficulty to meet customer expectation that result in problematic selling. More understanding we have about what customer want, greater our chance directed to produce what customer expected.

So how we get customer insight?
We can understand what customer’s want, based on what they buy. This is the most reliable source of information, generated from data mining activities toward internal records (sales records, customer records, inventory records, etc.). If customer buys a pair of Nike, this means our customer is interested in sports, and style. But this does not means if customer is interested in sport and style they will always buy Nike, so transaction is the result but “why” is beyond this information.

The “Why”
To answer this question we must collect information about what customer need, value at, lifestyle and attitude. Customer who value sport and comfort actually can choose Reeboks, Nike, Adidas, or others. But if s/he also value style and professionalism they will more considering Reeboks and Nike rather than others. Next, what is his/ her lifestyle? Reeboks and Nike have different lifestyle. Customer who buys Nike, should be agreed to Nike’s position in lifestyle, that is intuitive and free (remember the tag line ‘Just Do It’). The last is attitude, how customer evaluates product and services. Based on the value within the product and lifestyle s/he has, customer determine positive or negative evaluation attached to products or services. Customer chooses Nike because s/he thinks and feels that Nike is better.

Although customer agreed to benefit offered by Nike, agreed to Nike’s value, agreed Nike’s to lifestyle, and put higher mark on Nike, customer can actually buy other than Nike because externalities such as budget, school policy, stock availability in store, friends influence and so on. So our “Why” does not match to our “What”, our customer need, value, lifestyle and attitude different to what actually customer buy. So transactional data is not the ultimate although it is the reality (customer really spend money on the stuff). Data mining is important to understand “WHAT” but actual picture of customer will be completed by customer survey – the “WHY”, althought externalities will influence the linkage of the two.